Federal policies promoting ethanol are inefficient at any time, but they are particularly harmful to consumers in the midst of a severe drought. The EPA’s schedule of minimum targets for ethanol in the nation’s fuel mix, has caused some 40 percent of the nation’s corn harvest to be used for feeding vehicles, not people. Our analysis here is straightforward economics: Paul Krugman himself publicly called for an end to government ethanol support, over a decade ago, when the pressure on food prices wasn’t nearly as intense and we echo his call today.
A recent report from “Connecting the Dots” (an investment publication distributed by Standard Research) shows the startling impact that federal ethanol mandates and subsidies have had on the agricultural sector.
Click here to see the charts.